Primary Services New Zealand Limited v Fonagy

[2019] NZHC 3359

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-000404

[2019] NZHC 3359

BETWEEN

PRIMARY SERVICES NEW ZEALAND LIMITED

Applicant

AND

ANDREW MICHAEL FONAGY

First Respondent

AND

ORA TRUSTEES LIMITED

Second Respondent

Hearing:

Determined on the Papers

Counsel:

J L Bates for Applicant

E Fox for First Respondent
N R Williams for Second Respondent

Judgment:

17 December 2019

COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 17 December 2019 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:

Brown & Bates, Napier

Anderson Creagh Lai Ltd, Auckland Meredith Connell, Auckland

PRIMARY SERVICES NEW ZEALAND LTD v FONAGY [2019] NZHC 3359 [17 December 2019]

[1]        My judgment of 21 November 2019 concerned applications by Primary Services New Zealand Ltd (Primary Services):

(a)to set aside Ora Trustees Ltd’s (Ora) appearance in protest to jurisdiction under r 5.49 High Court Rules 2016 (the first application); and

(b)for leave to cross-examine witnesses and issue subpoenas on the hearing of the first application above (the second application).

[2]        Primary Services was successful on the first application and Ora’s appearance in protest to jurisdiction was set aside.

[3]        I did not need to consider the second application. I made no findings on its merits and dismissed it.

[4]        I reserved leave to the parties to apply for costs and have now received memoranda from counsel. The position is as follows:

The first application

(a)Primary Services seeks costs against Ora in respect of the first application on a 3C basis;

(b)Ora accepts that Primary Services is entitled to costs on the first application but on a 2B basis and challenges a disbursement for counsel’s accommodation;

The second application

(c)Primary Services submits that costs should lie where they fall on the second application;

(d)Mr Fonagy seeks costs against Primary Services on the second application on a 2B basis; and

(e)Ora seeks costs against Primary Services on the second application on a 2B basis.

Primary Services costs against Ora

[5]There are only two issues for consideration, namely:

(a)should Primary Services’ costs be awarded on a 2B or 3C basis; and

(b)should Primary Services recover counsel’s accommodation costs.

[6]        Primary Services submits that there should be an uplift on costs (from 2B to a 3C basis) because Ora’s protest to jurisdiction was based on an error in its construction of the High Court Rules which was “a basic one and the opposition should never have been pursued.” Ora argues that it acted reasonably in every step of the proceeding and there was no suggestion in my judgment that its arguments lacked merit or were inherently unlikely to succeed.

[7]        Primary Services’ argument is illogical. If Ora’s error was so obvious, its arguments were easily refutable, and it would be wrong to award costs on the fictitious basis that the application was complex/significant requiring a large amount of time. My assessment is that Ora’s position was made considerably more difficult by the decision of the Court of Appeal in Commerce Commission v Viagogo AG.1 That decision was issued after it had filed its protest to jurisdiction. That said, Viagogo was not on all-fours with the present case and I accept Mr Williams’ submission that his arguments, whilst ultimately unpersuasive, were measured and not untenable. It follows costs should be assessed on a 2B basis.

[8]        In relation to counsel’s accommodation costs, once it is accepted that it was reasonable for counsel to travel for the hearing (as it is accepted), it will usually also be sensible that counsel travel the night before to ensure he/she is at the court in time for a 10.00 am hearing. In such a case accommodation costs are incurred but there is no risk of the hearing being lost because flights are cancelled or delayed. This is particularly so when counsel is travelling from a regional airport. Counsel’s accommodation costs are allowed.

1      Commerce Commission v Viagogo AG [2019] NZCA 472.

[9]        The result is that Primary Services is entitled to costs against Ora in respect of the first application on a 2B basis in the amount of $5,616.50 plus disbursements of

$1,277.70.

Ora’s claim for costs on the second application

[10]      In the briefest of submissions, Ora argues it is entitled to costs on the second application because the application was unsuccessful. Primary Services argues that the second application was not determined, and costs should lie where they fall. I note that under r 14.8 High Court Rules costs on interlocutory applications should ordinarily be fixed when the application is determined.

[11]      I was not required to make any finding on the merits of the second application. Having reviewed it I find that in respect of Ora it was not unreasonable for Primary Services to have made the application. The application was prompted, at least in part, by an error in an affidavit filed on behalf of Ora that was subsequently corrected. This may have been significant had I been receptive to arguments advanced by Ora. However, against that, the application was pursued even after the correction was made and at a late stage. In the circumstances, it is appropriate that costs on the second application as between Primary Services and Ora lie where they fall.

Mr Fonagy’s claim for costs on the second application

[12]      The position in relation to Mr Fonagy’s claim for costs is not so clear. I have considered counsels’ memoranda. I am not satisfied that I can decide on the matter with what is in front of me. Primary Services’ application for summary judgment against Mr Fonagy is to be heard on 17 February 2020. I have decided that it would be appropriate to adjourn Mr Fonagy’s application for costs to be heard with the application for summary judgment. Counsel should be prepared to address me on the matter at that hearing.

Result

[13]      On the first application, Ora is to pay the costs of Primary Services in the sum of $5,616.50 plus disbursements of $1,277.70.

[14]      On the second application, as between Primary Services and Ora, costs shall lie where they fall.

[15]      On the second application, as between Primary Services and Mr Fonagy, I will hear from counsel on Mr Fonagy’s application on 17 February 2020.

O G Paulsen Associate Judge